Since starting with the PMA A-NZ in September this year I found myself set on a steep learning trajectory with the goal of getting my head around the fresh produce industry as quickly as possible. The journey so far has not only given me a wonderful insight into how diverse the sector is, but also left me inspired by all of the options available for the fresh produce industry to innovate and grow. It has also left me wondering, with all these options available, which ones will businesses pick?
Just recently I attended the PMA Fresh Summit in Orlando Florida. While this was my first time at Fresh Summit, and I am new to the industry, I’m also a consumer (aren’t we all?). I was amazed by the range of consumer-focussed technology and innovation that was present on the trade show floor.
Product customisation was present everywhere, most noticeable in packaging type and product preparation styles. Seeing the way produce was being shaved, spiralised and cubed to give new textures and eating experiences was a real eye opener on what is possible.
Many of these products also had the added appeal of increased convenience for the consumer. This is increasingly becoming a tool of marketers to encourage people to increase their consumption of fruits and vegetables. Time and time again we hear the messages that eating plenty of fresh produce is an important part of having a healthy lifestyle but for many people this is just an aspiration. This is turning into a huge opportunity for innovations in fruit and veg to make them more accessible for a range of different meal opportunities.
The area that stood out the most to me was vegetables for snacking. Seeing vegetables presented in easy to access packaging that has them mimicking the look of junk food was a real eye opener for me. It’s also great to see that the opportunities from innovations like this can impact all levels of the supply chain, from plant breeding, growing, packing and processing right through to retail. Plant breeders working on growing smaller produce is a concept that I haven’t seen anywhere else in my career in agriculture.
Technology also played a big role in the innovation on display. We’ve all heard about smart fridges, ovens and lunch boxes, which can take photos, log meals and gather nutrition information as well as provide recipes. Personalised nutrition, where produce can be tailored to peoples taste and nutrition needs, is also firmly on the radar. A number of companies around the world are already using light spectrum technology to guarantee the sweetness of fruit for online purchasers. Who knows where this technology will go next but when you think about how many people are already collecting data on their every move with activity trackers I can easily see a time when technology tracks our food preferences or needs, which then opens the space up for a service to meet that need.
In a world where recently a person used a drone and some bulldog clips to deliver a sausage in bread from Bunnings to himself (it’s not clear if he had onions or not), something that only a few years ago would have seemed like science fiction, who knows where technology will take us.
However these opportunities pan out it seems that the industry has plenty of ways to inspire consumers to increase their fruit and vegetable consumption.
Darren Keating, CEO of PMA A-NZ. Darren was appointed CEO of PMA-ANZ in September 2016 and brings youth, energy and a dynamic approach to the organisation. One of his key strengths is his ability to build positive relationships and strategic alliances with a range of stakeholders across all sectors.
With some recent fairly high profile food safety incidents in our industry, it is useful to see how consumers react and ultimately to gauge the impact on the affected categories.
The packaged salad category had a major recall incident from one supplier towards the end of last summer and more recently rock melons have also been caught up in a recall. In the former, there was an instantaneous drop in sales at retail of up to 30% of sales, although wholesale sales held up well, indicating that there was not much drop off in sales in the restaurant and foodservice trade. With rockmelons, early anecdotal evidence would suggest that consumers have fairly quickly switched to other melons and the overall category has not taken too much of a hit.
According to Dr. Joanne Daly of the Australian Academy of Technological Science and Engineering, consumers’ attitudes to food safety are often defined by “values” and not necessarily by logic or information. For instance, many consumers have the view that if they buy ‘local’ or eat ‘organic’, their food will be ‘safer’, when in fact there is absolutely no evidence that this is the case. Dr. Daly adds that it largely comes down to trust and integrity (which embody traceability and reputation). It is not easy to build public trust that is consistent with real risk and yet addresses community perceptions of risk. This trust can very easily be broken by food scandals as we saw in the berries in Patties Pies case in 2015 and it takes a long time for that trust to be regained.
Food safety is very much a shared responsibility, involving the whole supply chain. For consumers, the trust they place in the outlet that they purchase their fresh produce from is paramount – they are far too removed from the source of supply to really understand the technical or technological risks that occur further back in the supply chain. Consumers largely take the view that if the product is on the retail shelf, it must be safe to eat, effectively putting their full trust in the retailer. But for the retailer, it is critical that they have trust in their growers or intermediary suppliers – and this usually involves considerable reliance on assurance schemes and auditing. Consumers also put a lot of trust in the regulators, with all research indicating that consumers do get a good level of comfort from the level of regulation that currently exists in Australia and New Zealand.
The recent conference held by the Fresh Produce Safety Centre exemplified how a whole-of-chain approach with high level of collaboration between commercial companies, industry organisations, researchers, authorities and academia is leading to outcomes that should lead to safer fresh produce. Research projects are focussed on the priority higher risk areas, students and researchers are being provided with solid opportunities in the industry and local and overseas researchers and companies are developing some outstanding technologies for better detection and prevention. There is strong collaboration across all sectors of the industry – one of the key objectives of the Fresh Produce Safety Centre –, such as the development of the Harmonised Australian Retailer Produce Scheme (HARPS). This collaboration is critical if the ‘shared responsibility’ is to be taken seriously.
Two things are needed to take food safety in fresh produce to another higher level. Firstly, there needs to be an unstinting effort on prevention. This means more research on the causes of incidents and more application of the smart new technologies that can monitor and identify risk areas. Secondly, food safety needs to be an integral part of every company’s business culture – as occupational health and safety has become. If both of these can be achieved, the ‘consumer trust’ component should simply fall into place.
Michael Worthington, CEO of PMA A-NZ. He has more than 30 years of experience in the fresh produce industry. To read more of Michael's blogs, please click here.
Earlier this year I had the opportunity to attend an excellent presentation given by Craig Boyan, the President and Chief Operating Officer of H-E-B Supermarkets (based in Texas). With 370 stores and 86,000 employees, H-E-B is one of USA’s leading independent food retailers. Whenever you hear a speaker from another country, it is always interesting to see if any comparisons can be drawn with Australian food retail and in this case there are definitely some parallels.
His presentation succinctly laid out how world (and US) consumption in the 30 years after the second World War was driven by increases in wages; this income growth fell away in the 70’s and for the next 30 years (up until quite recently), consumption has been driven almost entirely by debt, to the point where countries and individuals are now saturated in it.
So with no likely income growth and a real need to cut back on the current debt levels, Boyan is starkly forecasting the next one, two or three decades of zero or declining consumption growth, which is not good news if you are a retailer. Can comparisons be made with Australia? They most certainly can – which, on the surface, means a fairly bleak outlook for retailers.
And on top of this slow (at best) growth, for the first time ever in the USA, the amount of money spent by consumers on eating out now exceeds food grocery sales. We are not there yet in Australia, but it is inevitable that we will eventually reach the same point where foodservice spend overtakes food retail sales.
So what does Boyan see for the future of food retail (and fresh produce in particular)? He believes it comes down to three things: firstly, companies need to be unrelenting in improving their food safety practices as he sees consumer confidence keeps getting knocked by food safety incidents. Secondly, he considers fresh produce can really capitalise on the huge problem the USA is experiencing with obesity (we are not far behind). Whilst the halo effect of fresh produce is building (50% of consumers are trying to lose weight), it is taking some time to translate into increased sales volumes. In fact, 40% of children are eating less than one vegetable per day and consumers are spending less on staples like whole apples and bananas, but more on convenience-driven pre-cut fruit and vegetables and ‘snackables’ like berries and mandarins. And thirdly (and probably most tellingly), he believe that those retailers who are under-investing in their employees in the race to the bottom with cost cutting are bound to lose.
Boyan was emphatic in showing the correlation between total employee cost and retailer performance – those retailers who are investing in their people (through staff training, family support, even shareholding) and supporting local communities are outperforming retailers who seek to pay the lowest wages and benefits and return little to the community. H-E-B’s model is all based on having contented and motivated employees (who in turn are proud of the stores they work in) and actively supporting their local communities and in turn, getting well rewarded by consumers who want to shop at H-E-B.
He was adamant that, with no meaningful consumer growth over the coming years, it will all come down to out-competing the next retailer, not through price but through a business culture that is built around people and the community in which it operates.
Michael Worthington, CEO of PMA A-NZ. He has more than 30 years of experience in the fresh produce industry. To read more of Michael's blogs, please click here.
How do we reach our customers in the digital age, especially when traditional media and advertising is in serious decline?
Marketers have been using E J McCarthy’s 4P’s Marketing Mix: Product, Price, Place and Promotion, for eons. Designed in the 1960’s, these four manageable variables form the structural strategy an organisation uses to satisfy a target market. The foundation worked – so much so that it has been drilled into our heads as we pursued our marketing degrees over the last 5 decades. Today however, the marketing landscape has changed. As technology continues to progress, hyper connected smart consumers are demanding more information and personalised communication. So does the 4P’s Marketing Mix still hit the mark in today’s digital age?
The digital disruption means companies have to invest in active brand strategies that take into account the declining reach and power of traditional media. It’s all about connecting and sharing stories, engaging and building relationships with target audiences, equipping customers with your brand’s message and empowering people to advocate your product. Fi Bendall, CEO of Bendalls Group and one of Australia's most respected thought leaders in the digital space, states “digital transformation is about building lasting relationships with consumers that lead to real brand awareness, engagement and reach”.
Developments in digital technology is resulting in new consumer behaviour which is reshaping the world’s economy. This has been coupled with a monumental shift in lifestyle habits such as healthier eating, work life balance and wellness. This shift opens enormous opportunities for the fresh produce industry to upgrade to intelligent and social business designs.
A digital transformation is not as simple as flicking a switch as it opens a whole new sphere of thinking. As we heard at PMA Fresh Connections earlier this year, the premier networking, educational and business event for the entire fresh fruit and vegetable industry, many businesses are turning to seasoned digital masters like Bendalls Group to help unlock the power of the digital world.
The Bendalls Group boasts an impressive advocacy program that reaches out to targeted networks through social engagement. The program connects your brand with up to 3 million influencers and builds relationships with gate keepers. These people use their power of influence to build credibility, visibility and positive brand endorsement to strengthen your brands position. This leads to thousands of conversations, recommendations and ultimately, increased sales! You can check out more about this program at www.bendalls.com.au
This is an enormously exciting time for the fresh produce industry as we now have more access to brand advocates than ever before. Previously, this was a near impossible feat without injecting thousands into celebrity endorsement however, the digital era is changing marketing for the better. Businesses can use the connected digital space to drive brand messages from person to person, thus creating the powerful form of Word of Mouth marketing.
According to Nielsen, 92% of consumers believe recommendations from friends and family over all forms of advertising. And this fact is not unknown in the marketing world. In fact, a recent study found that 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing. However, only 6% say they have mastered it.
A well designed digital strategy will deliver results that far surpass traditional marketing methods because they have the ability to communicate with and engage directly with a target market. The digital era is opening up a world of connection, relationship building and sharing. It will be interesting to see where it leads us next.
Renee Harrison is the Marketing Communications Manager at PMA A-NZ. To read more of Michael's blogs, please click here.
PMA Fresh Connections is once again upon us and it is great to be back in Brisbane! With the largest trade show in our brief 10-year history, this event continues to bring all parts of the fresh produce supply chain together for 3 days of solid educational content, multiple networking opportunities and hopefully some good business outcomes for delegates.
When looking back over the year on the type of issues that have made the headlines, such as labour hire, food safety crises and the costs of doing business, it emphasises the importance of the industry needing to work together to achieve meaningful outcomes. We believe that the HIA-funded initiative (known as the Harmonised Australian Retailer Produce Scheme) to reduce audit costs for the whole industry and PMA A-NZ’s initiative to form the Fresh Salad Producers Group (in the wake of the salmonella outbreak in packaged salads) are just two examples of how the industry can work collaboratively to make the industry more resilient and successful.
The theme for this year’s event is “Growing a Brighter Future” which is all about how the industry can grow, but importantly grow in a way that uses smart technology to produce and pack; that excites consumers about the amazing array of healthy, nutritious product we have; that aggressively expands the exports of safe, fresh produce from Australia and New Zealand; and that attracts bright young people to our industry.
To that end, PMA A-NZ is currently working on developing an online course (to be called the Produce Core Program) specifically aimed at the legions of young people who join our industry at a young age (think of all those whose first job is with a retailer, working in a pack house or harvesting fruit) – and then we lose them because we miss the opportunity to educate them about the products they are working with or the wide array of jobs that we can offer. This VET-certified Produce Core Program will provide this entry-level education with the key aim of encouraging these young people to forge a career in the industry – we sure need them!
So much is spoken about the ‘channels to market’ for fresh produce in Australia and New Zealand and how the major retailers dominate the industry. And yet when you think of all the growth opportunities in various export markets, the rise of the foodservice sector and the further market segmentation with online stores, farmers markets and specialty stores and you start to realise that we have products that can serve multiple market outlets, unlike so many other industries. It is all about how we can make the most of each one of these channels, so that overall the industry can flourish.
So with a stellar line-up of local and international speakers at PMA Fresh Connections this year, on a range of topics that cover all of today’s important issues, coupled with our biggest-ever trade show and the forums for the Special Interest Groups, we do hope that delegates get a lot out of the event and leave with some information, contacts or tools that will help themselves and their business “grow a brighter future”.
Michael Worthington, CEO of PMA A-NZ. He has more than 27 years of experience in the fresh produce industry. To read more of Michael's blogs, please click here.